I mean, what signals lead you to believe one scenario is more likely than the other?
It didn't sound like he was a weak employee in any way--if anything, he sounded like a strong employee because the founder of Instagram wanted to create a full-time role just to keep him, despite not having much money for the startup back then. I would assume the founder of Instagram is a better judge than I am, of who is good to hire.
It's possible that Instagram would have been more successful if he was there to support it back then.